Six nursing home business affiliates of Consulate Health Care sought Chapter 11 protection Monday, according to a Law360 report Tuesday.
The filing comes less than a month after a U.S. District Court judge entered a nearly $258 million judgment following an 11th Circuit Court of Appeals restoration of the False Claims Act judgement whistleblower suit award last year. The action stems from whistleblower Angela Ruckh, a one-time employee of Consulate Health Care, which previously operated as La Vie Rehab. She filed suit against the company, accusing it of overcharging Medicare and Medicaid by inflating therapy claims in 2011. The award was one of the largest in Medicare history.
In the firm’s case-opening declaration, Paul Rundell, chief restructuring officer of Salus Rehabilitation, an affiliate of Consulate and parent of La Vie, said the bankruptcy and current Chapter 11 sale plans were driven by an inability to continue operating the nursing homes involved with the Medicare overbilling and fraud-related judgement in place.
With two-thirds of nursing homes currently operating at a loss, according to a recent survey by the American Health Care Association, many industry experts predict we could see an increase in bankruptcy filings and merger and acquisition activity as pandemic recovery continues.
Several buyers have expressed interest in Salus, according to the declaration, with discussions continuing. The case will be financed in part through a $5 million debtor-in-possession loan from an affiliate of the debtor.
This article appeared in the McKnight’s Business Daily, a joint effort of McKnight’s Senior Living and McKnight’s Long-Term Care News.